Headed toward recovery

Region took a beating from the recession, but optimism is returning

By RICK KARLIN Capitol bureau

Published
1:00 am EDT, Sunday, September 27, 2009

Here are some numbers not usually cited in discussions about the economy: 42 degrees 45' North, 73 degrees 48' West. They have nothing to do with stock quotes, unemployment or the price of oil. They are the latitude and longitude of Albany.

They're important in looking at how the Capital Region is emerging from the nation's economic recession. Our location and our role as a government-education-health care center have a major impact on how we have been faring in relation to the national economy and in how we'll do in the coming months.

The nation, and the region, have taken a beating from the recession. But optimism about an economic resurgence is returning.

"It's not just that there are green shoots" heralding growth, said Hugh Johnson, chairman and chief investment officer at Johnson Illington Advisors, an Albany investment firm. "The green shoots have become solid signs that we are headed toward a recovery," he said.

The Capital Region's economy could be described as sitting on a three-legged stool, with government, education and health care accounting for a significant number of jobs.

Among state government, the region's medical facilities and the area's colleges and universities, the Capital Region has been insulated from past recessions.

This time, however, even the three-legged stool is unsteady, mostly because of the government sector.

Over the past year, the education sector has held steady and health care has actually grown, thanks to the aging of the baby boomers, said state labor market analyst James Ross.

Ross said the region is developing a "fourth leg of the three-legged stool," in high-tech manufacturing that feeds developing industries like green energy production and computer technology such as the planned GlobalFoundries chip plant in Saratoga County.

But state government has hit a wall. That's because state revenues are highly dependent on income taxes from Wall Street firms. Last year's financial collapse meant less money in state coffers, as Gov. David Paterson has noted in his ongoing calls to cut the state budget deficit. The deficit has lately been projected to reach $2.1 billion.

State government hasn't actually laid off people, but a recession-driven hiring freeze and attrition have meant lower job counts, said Ross.

Overall, the number of state government jobs in the region fell by 1,700, or 3.2 percent, from July 2008 to July of this year, bringing the number to 51,400.

The situation is similar at the region's colleges and universities. The financial crisis has meant their endowments are down, which has prompted a variety of responses.

Skidmore employees also are going without "general salary increases," this year and next year, she said, and travel as well as capital improvement budgets have been reduced.

Despite the cuts and freezes, Capital Region unemployment numbers are notably lower than in the rest of the nation. The region's economic underpinnings are holding up better than the economic foundations in other locations, said Ross.

Manufacturing jobs locally, for example, are down 6.2 percent, compared with 12.2 percent nationally, said Ross.

And the region's overall unemployment rate as of August, the latest period for which figures are available, was 7.0 percent, compared with 8.8 percent statewide and 9.7 percent nationally.

"We're still lower than the state and nation," Ross said.

Moreover, the national economy is firming, which should eventually lead to a better jobs picture.

Even some area manufacturers believe they're about to turn a corner.

"We're seeing a rebound," said David Bobrek, president and CEO of Blasch Precision Ceramics. The Albany maker of specialized ceramics, which employs 75 people, is one of the high-tech manufacturers Ross mentioned. Seventy percent of its products are exported.

After staff reductions and pay freezes earlier in the year, Bobrek said Blasch has hired four people in recent weeks.

Bobrek belongs to a networking group of local business executives, many of whom he said remain cautious about adding employees for fear of a "double dip" recession in which markets for their products once again slow down.

Other manufacturers are keeping an eye on the industries they service before they start hiring again.

"It truly is a domino effect," said Juliana Lam, spokeswoman for SI Group, a Schenectady-area chemical and resin maker that employs some 400 people. The company's workers have been made to take an extra five to six days off each month, said Lam.

Recently, company executives have increased their monitoring of the auto and construction industries to see what demand might be in coming months.

"You really have to examine your customers' forecasts and what they are doing," said Lam.

Rick Karlin can be reached 454-5758 or by e-mail at rkarlin@timesunion.com.